As part of the arrangement, Blue Cross will invest an undisclosed amount in the company, which has developed a digital insulin guidance system called d-Nav, and launch a one-year, 1,000-patient demonstration project with diabetic patients at Oakland Southfield Physicians, a healthcare provider network in Southeast Michigan.

Both Blue Cross and Hygieia believe broad implementation of the d-Nav service in the Great Lakes State could enhance and simplify insulin dosing for type 2 diabetes patients. The pilot will focus on improved diabetes management and better patient health overall.

“Having been in this field for quite a few years, I’ve seen the challenge in effectively managing diabetes patients,” said Ann Baker, Blue Cross’s vice president of wellness and care management. “We’re always looking for innovative approaches, and this one seemed sensible.”

Hygieia began as a medical device spinout from the University of Michigan, but has shifted its business model in the past few years. Now, instead of marketing d-Nav as a device, Hygieia is presenting it as a component of a smart, cloud-based technology service that, combined with the expertise of its small team of healthcare professionals, can help doctors and diabetes patients get a better handle on treatment.

“We learned from the market that even when a device is great, the healthcare system is overstressed,” Bashan said. “We have to introduce new solutions, especially if clinical changes are required.”

Bashan compares the d-Nav insulin management service to Comcast—you don’t just get the cable box, you get the package of channels, too. The way it works is a primary care physician refers a diabetes patient to Hygieia, which then trains the patient to measure and titrate insulin using the d-Nav device. The startup also handles ongoing treatment management; the referring physician only gets involved again if there’s a problem.

“Seventy percent of healthcare spending relates to services, like DaVita for dialysis,” Bashan said, referencing the Denver-based kidney care company. “There’s a lot of work involved. If we can take that work outside the clinic or hospital setting, that’s a very good solution.”

He said Blue Cross looked into why the U.K.’s National Health Service was paying Hygieia so much money for its d-Nav service. “We have solid data showing that it works, and it’s cheaper than not doing it. So will it work for Blue Cross? Healthcare is so expensive here that we expect to save even more money.” Insurers are seeking the kinds of deals Blue Cross struck with Hygieia, he added, because they’re looking for better, proactive solutions and they have the means to support promising ideas.

Bashan said Hygieia’s services have taken off in Europe, especially in Northern Ireland, in part because the country’s nationalized healthcare system prioritizes payment for prevention and positive patient outcomes. That’s not the case yet in the United States, although the Affordable Care Act is supposed to be moving our healthcare system in that direction. Bashan shared a fairly alarming statistic: In the U.S., patient outcomes are ranked 37th in the world, between Costa Rica and Cuba. However, he assured, big changes to American healthcare are “happening as we speak.”

Those changes are part of the reason Blue Cross was interested in partnering with Hygieia. Michigan, because of its high proportion of diabetes patients, is generally ahead of the curve with insulin management compared to other parts of the country, Baker said. Insurers are required to pay for a certain amount of equipment and education for diabetes patients. That incentivizes doctors to better manage the condition, but Baker believes there’s room for improvement.

“We’ll try it for a year and see how it goes,” she added. “A third party will evaluate patient outcomes to find out if there were improvements, if patients liked it, and if doctors liked it. Then we’ll look at how reduced complications affected cost. But we see it as a big opportunity because diabetes rates continue to increase, and we think it’s very cool to support a Michigan company.”

Sarah Schmid Stevenson is the editor of Xconomy Detroit/Ann Arbor. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET_AA